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Inflation pressures could lead to practice closures, managers warn

by Beth Gault
22 July 2022

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Practice managers have warned of practice closures due to increasing pressures from inflation, including rising staffing costs.

It comes after the Government recommended a 4.5% pay rise for salaried GPs and a £1,400 rise for other practice staff, both of which are expected to come from reprioritising existing budgets.

The recommendations came from the Review Body for Doctors’ and Dentists’ Remuneration (DDRB) and were accepted in full by the Government earlier this week.

The Department of Health and Social Care (DHSC) said that eligible doctors and dentists, which includes salaried GPs, should receive a pay rise of 4.5%.

The DHSC added that NHS staff under the Agenda for Change contract should receive a pay rise of ‘at least’ £1,400 backdated to April this year.

Funding was provided for a 2.1% pay uplift for other staff not on the Agenda for Change contract, including GPs and practice staff, in the core contract uplift in April, which was initially negotiated in 2019.  

However, the DHSC said the money for the newly recommended pay rises would come from reprioritising within existing departmental budgets.

In a document detailing how the pay award will be funded, chief financial officer of NHS England, Julian Kelly, said: ‘The additional cost will require NHSE and the Department to reprioritise centrally held budget lines including national technology programmes. Details will be set out shortly.’

These recommendations have been met with ‘disappointment and anger’ by practice managers.

A statement from the Institute of General Practice Managers (IGPM) said: ‘Many practices are already struggling due to increased running costs, high locum rates, estates challenges etc. We are struggling to recruit and retain staff as it is.

‘To pass on increased rates of pay is something we would all want to do, but in some cases to do so would mean to financially destabilise practices and may lead to more practice closures.’

It added that practices have also had to fund this year’s increase to national insurance contributions themselves, with no additional funding.

‘On top of this, many areas have not seen funding for enhanced services increase in line with inflation,’ it said.

‘Practices are therefore having to continue to provide services at an increased cost – not just in terms of staffing, but also in terms of utilities, consumables and transport costs – all for the same level of remuneration.’

NHS England itself warned earlier this week that it may need to make cuts to primary care funding if staff were awarded above a 3% pay rise and it was not given the money to pay for this.

Real terms cut

Other NHS leaders have warned the pay increase is actually a real-terms pay cut for staff, due to inflation reaching 9.4% in June.

The Doctors’ Association UK’s (DAUK) co-chair, Dr Matt Kneale, said: ‘The Government with this appalling announcement have demonstrated a desire to utterly humiliate essential workers and emergency responders with what is in real-terms another pay cut.

‘This action is immoral and unacceptable. We call on the Government to immediately implement full pay restoration; failure to do so will see large numbers of doctors leave the NHS and patient care will suffer.’

The BMA’s GP Committee is exploring industrial action in response to the ‘derisory’ pay award after a motion to do so was passed unanimously at a meeting of its GPC yesterday (21 July).

GPC England executive officer Dr Richard Van Mellaerts warned that practices could fold if they face their ‘rocketing’ expenses without more Government support.

He added: ‘With inflation pressures at 9.4%, something has to give. Without understanding and support from Government, practices will fold and patients will have nowhere else to turn other than A&Es.

‘With spiralling costs, record demand and workforce shortages across the board, we know practices across the country are already struggling to provide safe care, and the Government has now actively chosen a path that compromises this further.’

It follows the news that some locum GPs are being offered shifts at a rate of £1,000 per day or more by an agency.

Earlier this month, specialist medical accountant and MIP contributor Andrew Burwood took a deeper look at investment in general practice over the past five years and the outlook for practice profits, warning that ‘difficult decisions’ will have to be made.